Severance Agreement - Novell Inc. and Richard A. Nortz
Mr. Richard A. Nortz
July 12, 2001
Page 15
[NOVELL, INC. LETTERHEAD]
July 12, 2001
Mr. Richard A. Nortz
11826 Hidden Canyon Lane
Sandy, Utah 84092
Dear Rich:
This letter agreement (the "Agreement") confirms the agreement that we have
reached regarding your separation from employment with Novell, Inc. ("Novell" or
the "Company"). The purpose of this Agreement is to establish an amicable
arrangement for ending your employment relationship, to release the Company and
its affiliates from any claims that you may have against any of them, and to
permit you to receive certain separation pay, acceleration of vesting of stock
options, and related benefits. You understand that the benefits under this
Agreement are greater than those offered to you in lieu of those for which you
otherwise might be eligible under the Novell, Inc. Senior Management Severance
Plan ("Plan"). You acknowledge that you are entering into this Agreement
voluntarily. By entering into this Agreement, you understand that you are giving
up your right to the fullest extent permitted by law to bring legal claims
against the Company including, among others, claims relating to your employment
and its termination. If you were not to enter into this Agreement and were to
bring any claims against the Company, the Company would dispute the merits of
those claims and would contend that it acted lawfully and for good business
reasons with respect to you. Neither the Company nor you want your employment
relationship to end with a legal dispute. You understand that by offering to
enter into this Agreement the Company is not admitting in any way that it
violated any legal obligation that it owed to you or to any other person. To the
contrary, the Company's willingness to enter into this Agreement demonstrates
that it is continuing to deal with you fairly and in good faith. With those
understandings and in exchange for the promises of you and the Company set forth
below, you and the Company agree as follows:
1. Effective Date
This Agreement shall be deemed to have been executed as of the date of
your signature below (the "Execution Date"). The Agreement shall become
effective on the eighth (8th) day following the Execution Date (the
"Effective Date") unless you exercise your right to revoke in accordance
with Section 13 below.
2. Resignation
You hereby resign from your employment with Novell effective as of January
31, 2002 provided that the Company may accelerate said resignation on 30
days advance notice (January 31, 2002 or such earlier date selected by the
Company hereafter referred to as the "Resignation Date"). You agree that on
the Resignation Date all offices and positions that you hold with Novell
and all related or affiliated entities also terminate. The Company will pay
to you all base salary earned by you through the Resignation Date and all
accrued but unused vacation pay due to you based on your employment through
the Resignation Date. 3. Interim Employment
(a) You acknowledge and agree that between the date of this
letter and the Resignation Date (the "Interim Period") that you shall
report to Novell's Chief Operating Officer and shall perform such
tasks as may be assigned to you, including transitioning various
matters to the Company's five geographic presidents.
(b) Your eligibility for Severance Payments, Additional Severance
and other payments and benefits under Sections 3 and 4 above
(collectively, the "Severance Benefits") hereunder will terminate if,
prior to the Resignation Date, you voluntarily resign from your
employment with the Company without the consent of the Company or your
employment is terminated by the Company for "cause." For purposes of
this Agreement, Novell shall be deemed to have cause to terminate your
employment if any of the following occur and, within 14 days following
your receipt of a written demand from the Company describing its basis
for believing cause exists, you have failed to effectively cure such
basis for cause: (i) your continued violations of your obligations to
the Company which are demonstrably willful or deliberate on your part;
(ii) your engaging in willful misconduct which is injurious to the
Company or its affiliates;
(iii) your commission of a felony, an act fraud against or the
misappropriation of property belonging to the Company or its
affiliates;
(iv) your breach, in any material respect, of the terms of
any confidentiality or proprietary information agreement between
you and the Company, including without limitation any breach by
you of your obligations under Section 8 hereinbelow; or
v) a determination by the Company's Chief Operating Officer
and Chief Executive Officer that you have committed a material
violation of the Standards of Employee Conduct, which standards
may be altered from time to time by the Company, as defined in
the most current version of the Company's Employee Handbook. You
understand and agree that the foregoing definition of cause
applies only for purposes of this Agreement, but is not intended
to amend or modify the at-will nature of your employment
relationship. (c) During the Interim Period, your Base Salary
shall remain at an annualized rate of $425,000 per year.
4. Payments
In exchange for and subject to the terms and conditions of this Agreement,
including, without limitation, the general releases of claims in Section 7
(including the subsequent delivery of the release contemplated by Section
7(d)), Novell shall:
(a) Pay you Eight Hundred and Fifty Thousand Dollars ($850,000) (i.e., an
amount equal to 200% of your Base Salary (the "Severance Payment"). The
Severance Payment shall be paid by check or wire transfer, as you direct,
by the Company to you in equal installments over twenty-four (24) months,
such installments payable in accordance with Novell's regular payroll
practices for senior executives, subject to your continuing compliance with
Section 8 below, with the first such payment being made on the first
regular payroll date next following the Resignation Date. For purposes of
this Agreement, the term "Base Salary" shall mean your gross base salary on
an annualized basis, exclusive of bonuses, commissions and other incentive
pay, as in effect immediately prior to the Resignation Date.
(b) Pay you Five Hundred and Ten Thousand Dollars ($510,000) (the
"Additional Severance"). Subject to your continuing compliance with Section
8 below, the Additional Severance shall be paid by check or wire transfer,
as you direct, by the Company to you as follows: (i) Two Hundred and
Fifty-Five Thousand Dollars ($255,000) in a lump sum within 14 days
following the Resignation Date and (ii) Two Hundred and Fifty-Five Thousand
Dollars ($255,000) payable in four (4) equal quarterly installments of
Sixty-Three Thousand Seven Hundred and Fifty Dollars ($63,750) each, with
the first such installment due three (3) months following the Resignation
Date and the final installment due fifteen (15) months following the
Resignation Date.
(c) Accelerate the vesting of that portion or portions of your stock
options and restricted stock grants, which would have vested within two
years after the Resignation Date. Subject to the original term of the
option grant or grants, the vested options shall otherwise remain
exercisable, subject to your continuing compliance with Section 8 below,
for a period of up to twelve (12) months following the Resignation Date
(January 31, 2002). The Company hereby waives its repurchases rights with
respect to vested restricted stock.
(d) Provide you with reimbursement for financial planning and tax return
preparation, not to exceed Eleven Thousand Dollars ($11,000) in the
aggregate, for each of calendar year 2001 and 2002.
5. Benefits
Your eligibility to participate in all Company employee benefit plans and
programs will cease effective on or after the Resignation Date pursuant to
applicable benefit plan terms and benefit practices. Any continuing rights
to benefits that you may have are governed by the terms of those benefit
plans and programs and the Consolidated Omnibus Budget Reconciliation Act
of 1986, as amended. The Company shall pay you a monthly amount equal to
the premium it would have paid on your behalf if you had remained employed,
under your health and dental plan elections in effect as of the Resignation
Date, until the earlier of the date on which you become eligible for health
or dental coverage through another employer or the second (2nd) anniversary
of the Resignation Date.
6. Tax Deductions and Reporting
Novell shall reduce all payments made to you under this Agreement by those
deductions and withholdings that it reasonably determines to be required
for tax purposes and shall make such tax-related reporting that it
reasonably determines to be required with respect to payments under this
Agreement.
7. General Releases of Claims
You voluntarily release and discharge Novell and its affiliates and
subsidiaries, its and their respective predecessors, successors, and
assigns, and the current and former officers, directors, investors,
shareholders, employees, and agents of the foregoing (any and all of which
hereinafter are referred to as the "Released Parties") generally from all
charges, complaints, claims, promises, agreements, causes of action,
damages, and debts of any nature whatsoever, known or unknown (collectively
referred to as "Claims"), which you have, claim to have, ever had, or ever
claimed to have had against the Released Parties. This general release of
Claims includes, without implication of limitation, all Claims related to
your employment with the Company, the compensation provided to you by the
Company, rights or benefits under the Plan, the circumstances of your
termination from employment with the Company, or your activities on behalf
of the Company, including, without implication of limitation, any Claims of
wrongful discharge, breach of contract, breach of an implied covenant of
good faith and fair dealing, tortious interference with advantageous
relations, any intentional or negligent misrepresentation, and unlawful
discrimination or retaliation under any federal, state or local common law,
statute, order, ordinance or regulation (including, without implication of
limitation, Title VII of the Civil Rights Act of 1964, the Age
Discrimination in Employment Act, The Americans with Disabilities Act and
any similar California state or local law or ordinance). You also waive any
Claim for reinstatement, damages of any nature, severance pay, attorney's
fees, or costs. Notwithstanding anything in this general release to the
contrary, this general release shall not be construed to limit your right
to enforce this Agreement.
(a) You shall not hereafter pursue or accept damages or other relief in any
type of claim or action against any of the Released Parties with respect to
anything that has occurred up to your execution of this Agreement;
provided, however, that nothing in this Agreement shall be construed to
limit your rights under this Agreement.
(b) You hereby represent and warrant that you have not heretofore assigned
any Claim otherwise released pursuant to this Agreement to any third party.
You further represent and warrant that you have not heretofore filed any
Claim with any court or administrative agency. (c) As a condition precedent
to the Company's obligation to provide to you the Severance Benefits, you
shall execute on or after the Resignation Date, deliver to the Company and
not revoke the additional Release attached hereto as Exhibit A.
8. Employee Covenants
In accordance with the terms of this severance offer, the Company's
obligation to provide and your eligibility to receive the Severance
Benefits are expressly conditioned upon your compliance with the following
covenants. You understand and acknowledge that, in accordance with the
terms of this severance offer, in the event you breach your obligations to
the Company under the following covenants, the Company's obligation to
provide Severance Benefits to you shall cease, without prejudice to any
other remedies that may be available to the Company.
(a) Covenant Concerning Confidential Information. You acknowledge that, by
reason of your duties for Company you had access to and were brought into
frequent contact with and became informed of confidential or proprietary
information which the Company possesses or to which the Company has access,
and which related to the Company and/or its business, is not generally
known to the public or in the trade and is a competitive asset and/or
constitutes a "trade secret," as that term is defined by the laws of Utah,
of the Company (collectively, "Confidential Information"). You further
acknowledge and agree that Confidential Information includes, without
limitation, all information, whether reduced to writing (or in a form from
which information can be obtained, translated, or derived into reasonably
usable form), or maintained in your mind or memory, which derives
independent economic value, actual or potential, from not being readily
known to or ascertainable by proper means by others who can obtain economic
value from the disclosure or use of such information, including without
limitation, non-public (A) planning data and marketing strategies; (B)
terms of any new products and investment strategies; (C) information
relating to personnel matters; (D) financial results and information about
business condition; (E) terms of any investment, management or advisory
agreement or other material contract; (F) proprietary software and related
documents; (G) client and prospecting lists and contact persons at such
clients and prospects; (H) business relationships (prospective or
otherwise); and (I) material information concerning Customers or their
operations, condition (financial or otherwise) or plans. You hereby
acknowledge and agree that reasonable efforts have been put forth by the
Company to maintain the confidentiality of such Confidential Information.
(b) You acknowledge that your employment created a relationship of
confidence and trust on your part with respect to Confidential Information
to which you have access during your employment, and that Confidential
Information, whether compiled or created by you or the Company is and will
remain the sole property of the Company. You faithfully shall keep
Confidential Information in strict confidence and shall not, either
directly or indirectly, at any time, make known, divulge, reveal, furnish,
make available, or use Confidential Information without the prior written
consent of an authorized officer of the Company. You understand and
acknowledge that your obligations under this Section 8(a) will survive
termination of your employment, regardless of reason, and will continue
indefinitely unless and until any such Confidential Information has become,
in Company's reasonable judgment, stale, or, through no fault of yours,
generally known to the public or you are required by law (after providing
the Company with prior notice and a prior opportunity to contest such
requirement) to make disclosure.
(c) You shall not, directly or indirectly, use the Company's Confidential
Information to compete with the business or activities of the Company.
(d) Covenant Concerning Solicitation of Customers.
(i) While you remain employed by the Company and for two years from
the Resignation Date (the "Restricted Period"), you shall not, in
any capacity, directly or indirectly, alone or with others (A)
solicit of any Customer business that is competitive with the
Company's current business or planned business, (B) divert,
entice, or otherwise take away from the Company the business or
patronage of any Customer, (C) solicit or induce any Customer to
terminate or reduce its business relationship with the Company;
(D) refer a Customer to another provider of services or products
competitive with those of the Company; or (E) attempt to do any
of the foregoing.
(ii) For purposes of this Section 8(b), "Customer" refers to any
person or entity with whom you had contact in your capacity as an
employee of Company and who (A) is purchasing goods or services
from the Company on the Resignation Date , (B) has placed an
order(s) for goods or services with the Company as of the
Resignation Date, (C) regularly purchases goods or services from
the Company, even if no orders are pending as of the Resignation
Date, (D) has purchased goods or services from the Company within
six (6) months preceding the Resignation Date, or (E) you
solicited, directly or indirectly, in whole or in part, on behalf
of Company within one (1) year preceding the Resignation Date.
(e) Covenant Concerning Solicitation of Employees.
(i) During the Restricted Period, you shall not in any capacity,
directly or indirectly: (A) solicit, encourage or take any other
action which is intended to induce any Person to terminate his or
her employment or other relationship with the Company; (B)
interfere in any manner with the contractual or employment
relationship between the Company and any Person; or (C) hire or
retain any Person.
(ii) For purposes of this Section 8(c), the term "Person" refers to
any individual who provided services to the Company, directly or
indirectly, as an employee, independent contractor or consultant
(other than entities and individuals working for entities such as
law firms, accounting firms or management consulting firms) on or
after January 1, 2001.
(f) Covenant Concerning Unfair Competition. During the Restricted Period,
you shall not directly or indirectly engage in (whether as employee,
consultant, proprietor, partner, director of otherwise), or have any
ownership interest in, or participate in the financing, operation,
management or control of, any person, firm, corporation or business that is
a Restricted Business in a Restricted Territory without the prior written
consent of the Chief Executive Officer of Novell. You acknowledge and agree
in your capacity as Senior Vice President of Field Operations for Novell,
you had access to Confidential Information, including, without limitation,
Novell's business plans and strategies, especially with respect to sales,
marketing and product development, and that you had access to and benefited
from Novell's goodwill with its customers and prospective customers. You
further acknowledge and agree that your use or disclosure of Confidential
Information or misappropriation of Novell's goodwill would be especially
harmful to Novell. You further acknowledge and agree that it would be
impossible for you to perform any services for or on behalf of a Restricted
Business without using and/or disclosing (inadvertently or otherwise)
Confidential Information or misappropriating (inadvertently or otherwise)
goodwill of Novell. You agree that this Section 8(d) is intended to protect
Confidential Information and goodwill and is reasonably and narrowly
drafted for that purpose.
For purposes of this Agreement, the term "Restricted Business" shall mean
any of the following entities or their respective affiliates; International
Business Machines; Sun Microsystems; Microsoft; Oracle; Genuity; Critical
Path; Network Appliances; Cashflow; or Entegrity ("Restricted Companies").
You acknowledge and agree that in your capacity as Senior Vice President of
Field Operations for Novell, you had access to Confidential Information,
including, without limitation, Novell's business plans and strategies, that
use or disclosure of that Confidential Information to Restricted Companies
would be especially harmful to Novell and that it would be impossible for
you to perform any services for or on behalf of the foregoing entities
without using or disclosing (inadvertently or otherwise) Confidential
Information. You agree that this Section 8(d) is intended to protect
Confidential Information and is reasonably and narrowly drafted for that
purpose. You further acknowledge and agree that this Section 8(d) does not
prohibit or restrain you from pursuing an entire business, trade or
profession and that the skills, experience and training that qualify you to
be a Sr. V.P. of Field Operations are readily transferable to a wide range
of business pursuits beyond the limited restrictions contained herein..
For purposes of this Agreement, the term "Restricted Territory" shall mean
the counties, cities, municipalities or states of the United States.
(g) Cooperation. You shall cooperate fully with Novell in the defense or
prosecution of any claims or actions now in existence or which
may be brought in the future against or on behalf of Novell which relate to
events or occurrences that transpired while you were employed by Novell.
Your full cooperation in connection with such claims or actions shall
include, but not be limited to, being available to meet with counsel to
prepare for discovery or trial and to act as a witness on behalf of Novell
at mutually convenient times. Similarly, you shall cooperate fully with
Novell in connection with any investigation or review by any federal, state
or local agency or regulatory authority as any such investigation or review
relates to events or occurrences that transpired while you were employed by
Novell. Novell shall attempt to make requests for such cooperation so as
not to interfere with your search for or performance of your subsequent
employment. Novell shall provide and reimburse you for any reasonable
out-of-pocket expenses incurred in connection with your performance of
obligations pursuant to this Section 8(e).
(h) Nondisparagement. You shall not take any action or make any statement,
written or oral, to any person which disparages or criticizes Novell or its
affiliates, or their officers, directors, employees, or practices, or which
could disrupt or impair its or their normal operations. Novell shall direct
its senior managers who are informed of this Agreement not to take any
action or make any statement, written or oral, which disparages or
criticizes you.
(i) Return of Property. All documents, records, materials, software,
equipment, and other physical property, and all copies of any of the
foregoing, whether or not pertaining to Confidential Information, that
have come into your possession or been produced by you in connection
with your employment ("Property") have been and remain solely the
property of the Company. You agree that you will return to the Company
all Property immediately.
(j) Disclosure of Certain Provisions. You shall disclose the existence and
terms of this Section 8 to any prospective employer, partner or co-venturer
prior to entering into an employment, partnership or other business
relationship with such person or entity.
(k) Breach. You specifically acknowledge and agree that (i) any breach by
you of the provisions of Section 8 of this Agreement will result in
irreparable injury to the Company, (ii) a remedy at law alone will be an
inadequate remedy for such breach, and (iii) in addition to any other
remedy the Company, it shall be entitled (a) to discontinue further
payments to you, (b) to immediate return by you of all consideration
theretofore provided to you under this Agreement, and (c) to enforce the
specific performance of this Agreement by and to obtain both temporary and
permanent injunctive relief without the necessity of proving actual
damages.
(l) Interpretation. The covenants contained herein are intended to be
construed as a series of separate covenants, one for each county, city and
state or other political subdivision within the United States. Except for
geographic coverage, each such separate covenant shall be deemed identical
in terms to the covenants contained in the preceding paragraphs. If, at any
judicial proceeding, the court shall refuse to enforce any of these
separate covenants (or any part thereof) deemed included in such paragraphs
(after giving effect to Section 10 below), then such an unenforceable
covenant (or such part) shall be deemed to be eliminated from this
Agreement for the purpose of those proceedings to the extent necessary to
prevent the remaining separate covenants (or portions thereof) to be
enforced.
9. Confidentiality of Agreement
You agree that you shall keep the terms of this Agreement terms strictly
confidential except as provided in Paragraph 8(h) hereof. Notwithstanding
the foregoing, nothing in this Agreement shall prevent you from making
disclosure regarding the terms of this Agreement (a) to your attorneys and
accountants, but only to the extent necessary to receive legal, accounting
or tax advice, or (b) unless required by court order or other legal process
after first providing Novell with notice and an opportunity to oppose such
order or process.
10. Severability
You agree that if any portion or provision of this Agreement shall to any
extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the court may amend such portion or provision so as to
comply with the law in a manner consistent with the intention of this
Agreement, the remainder of this Agreement, or the application of such
illegal or unenforceable portion or provision in circumstances other than
those as to which it is so declared illegal or unenforceable, shall not be
affected thereby, and each portion and provision of the Plan shall be valid
and enforceable to the fullest extent permitted by law. 11. Applicable Law,
Jurisdiction and Venue
This Agreement shall be deemed to be made and entered into in the State of
Utah, and shall in all respects be interpreted, enforced and governed under
the internal laws of Utah, without giving effect to choice of law
principles thereunder. To that extent, you hereby agree to consent to
exclusive personal jurisdiction and venue of the State and Federal courts
situated within or for Utah for purposes of enforcing this Agreement, and
waive any objection that you might have to personal jurisdiction or venue
in those courts.
12. Assignment; Successors and Assigns, etc.
Neither the Company nor you may make any assignment of this Agreement or
any interest herein, by operation of law or otherwise, without the prior
written consent of the other party; provided that the Company may assign
its rights under this Agreement without your consent in the event that it
shall effect a reorganization, consolidate with or merge into any other
corporation, partnership, organization or other entity ("Purchaser"), or
transfer all or substantially all of its properties or assets to any
Purchaser and provided further, the Company shall ensure that any such
Purchaser assumes the remaining payment obligations under Sections 3, 4 and
5 above. This Agreement shall inure to the benefit of and be binding upon
the Company and you, their respective successors, executors,
administrators, heirs and permitted assigns.
13. Notices, Acknowledgments and Other Terms
You are advised to consult with an attorney before signing this Agreement.
This Agreement constitutes the entire agreement between you and the
Company, and all previous agreements or promises between you and the
Company, with the exception of those Option Agreements and Restricted Stock
Agreements and the equity plan(s) to which they relate as described herein
and the Intellectual Property Agreement by and between you and the Company
dated October 3, 1995, are hereby superseded, null, and void. You
understand and agree that this is a full and final agreement applying not
only to all claims as described above that you know of, anticipate, or have
been told about, but also to all claims that are unknown, unanticipated,
and undisclosed to you.
You acknowledge that you have been given the opportunity, if you so desire,
to consider this Agreement for twenty-one (21) days before executing it. If
not signed by you and returned to me so that I receive it within twenty-one
(21) days of your receipt of the Agreement, this Agreement will not be
valid. In addition, if you breach any of the conditions of the Agreement
within the twenty-one (21) day period, the offer of this Agreement will be
withdrawn and your execution of the Agreement will not be valid. In the
event that you execute and return this Agreement within less than
twenty-one (21) days of the date of its delivery to you, you acknowledge
that such decision was entirely voluntary and that you had the opportunity
to consider this letter agreement for the entire twenty-one (21) day
period. You further agree that any changes to this Agreement negotiated by
the parties since it was first presented to you on July 12, 2001 do not
start a new twenty-one (21) day period. The Company acknowledges that for a
period of seven (7) days from the date of the execution of this Agreement,
you shall retain the right to revoke this Agreement by written notice that
I receive before the end of such period, and that this Agreement shall not
become effective or enforceable until the expiration of such revocation
period.
By signing this Agreement, you acknowledge that you are doing so
voluntarily. You also acknowledge that you are not relying on any
representations by the Company or any other representative of the Company
concerning the meaning of any aspect of this Agreement.
In the event of any dispute, this Agreement shall be construed as a whole,
shall be interpreted in accordance with its fair meaning, and shall not be
construed strictly for or against either you or the Company. The law of the
State of Utah shall govern any dispute about this Agreement, including any
interpretation or enforcement of this Agreement, without giving effect to
the conflict of laws principles of Utah law. In the event that any
provision or portion of a provision of this Agreement shall be determined
to be unenforceable, the remainder of this Agreement shall be enforced to
the fullest extent possible as if such provision or portion of a provision
were not included. This Agreement may be modified only by a written
agreement signed by you and an authorized representative of the Company.
<PAGE>
If you agree to these terms, please sign and date below and return this
Agreement to me within the time limitation set forth above.
Sincerely,
NOVELL, INC.
By: /s/ Alan J. Friedman 8/10/01
Accepted and agreed to:
/s/ Richard A. Nortz Aug 6, 2001
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Richard A. Nortz Date